capital stack
A description of the totality of capital invested in a project, including pure debt, hybrid debt,and equity.The stack is described as containing the most risk at the top,traveling down the stack to the position with the least risk. Higher positions in the stack expect higher returns for their capital because of the higher risk.Lenders and equity stakeholders are highly sensitive to their position in the stack.Typically, the stack is arranged as follows.
1. Sponsor equity
2. Preferred equity
3. Mezzanine investors (hybrid debt and equity)
4. Second and other junior mortgages
5. Investment-grade first mortgages
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